Avoid 3 Roads to CRM Disaster

Rich Cook, in his article below,reminds us that CRM is largely about strategy, people, and processes. With a CRM implementation, there are a ton of moving parts to measure and keep track of. Making sure that you are attending to the 3 items below will give you a great shot at success, and most importantly, increased profitability.

3 Roads to CRM Disaster

Know the signs to avoid these all too common CRM hazards.

By Rick Cook | April 23, 2009

A few years ago, analysts were reporting failure rates as high as 50 to 70 percent for CRM projects. While companies have gotten more savvy about CRM and how to implement it, the failure rate for the software still remains high.

Part of that rate depends on the definition of “failure” as well as unrealistic expectations. But the fact remains that many CRM projects fail in the sense of not delivering the estimated increases to the bottom line, customer satisfaction and other endpoint metrics.

While the details, and the definitions, of these failures often vary significantly, they usually come down to the same major errors.

Here are three pitfalls you want to avoid with CRM:

1. Concentrating on the technology at the expense of the people: CRM is not technology. Instead, it uses technology to support sales and marketing’s efforts to get closer to your customers.

Implementing CRM starts well before you purchase the system or even decide which software to use. It begins with a clear definition of CRM goals, project requirements and success factors. In other words, what are you trying to do, what will you need to do it and how will you know when you’ve succeeded? This also has to include a careful analysis of your sales process, its strengths and weaknesses and where you need to improve.

This definition phase is doubly important because not all CRM packages are created equal. Like companies, they have different strengths and weaknesses and you need to choose one which matches your needs. All of them have the same general functionality but they vary in how well and how completely they do different jobs.

Similarly, you have to consider the nature of your business when choosing a CRM solution. If your business involves long sales cycles of high-value equipment with multiple decision makers, you want to emphasize different things in your sales strategy than if you’re selling lower-cost goods on a fast sales cycle with many repeat customers.

Because CRM makes heavy use of computers, it’s easy to confuse it with technology. In fact, the history of CRM implementation is rife with projects which were a technical success — delivered on time and within budget — but which were practical failures because the project didn’t deliver the bottom-line benefits.

If you equate technology with CRM, you’ll probably end up confusing your employees and annoying your customers.

2. Not having everyone aboard: According to Gartner Group, most CRM failures are the result of user errors rather than technological ones.

The most common of these failures, experts agree, is not having everyone on the same page. A successful CRM effort has support from all staff and widespread agreement on the goals and methods of the CRM project. That includes the sales staff, whom will use the CRM tools, and top management, whom must provide the drive and oversight for the project.

A full CRM implementation requires wide-ranging changes throughout your sales and marketing organization. If the people who have to execute your new CRM strategy don’t understand and agree with what you’re doing, you’ll most likely have a failure.

Likewise, a CRM project needs realistic, enthusiastic support from management at all levels, including a manager or managers who will champion the project and help to keep it on track. This kind of broad-based support is critical and it usually doesn’t happen automatically. It has to be built. To repeat an often-stressed theme, CRM requires selling inside your company.

Stress the benefits that CRM will bring to your staff. The fact that a CRM system will give you greater control over your sales process isn’t nearly as important to your sales reps as the potential to increase sales, and hence profits. On the other hand, it’s likely to be much more important to the managers above you. When you talk about CRM’s benefits, stress the ones that the people you are talking to are likely to be most interested in.

It’s also important to realize that the job of getting and keeping everyone aboard doesn’t end when the CRM project goes live. The sales staff has to be constantly encouraged, reminded and sometimes pushed to use CRM tools. Managers have to be shown through clear metrics how the CRM effort is paying off.

In making CRM work, both in implementation and in ongoing use, feedback is critical. You’re almost certainly going to have to adjust the project as you go along, and to get it right you’re going to have to rely on feedback from all levels. More than most project implementations, CRM is a matter of constantly adjusting to get things “right” under continuously changing conditions.

3. Not putting the customer first: By its nature, CRM is customer-centric. The CRM model tries to increase sales by focusing on and building better relations with the customer.

A successful CRM implementation improves the customer experience. One that fails makes the customer less willing to deal with you. This is an important metric, even if it isn’t always as easy to see.

One place where success with the customers shows up is in the bottom line. An effective CRM implementation makes it easier and more pleasant for customers to buy from you. This shows up not just in increased sales, but in increased sales per customer, increased cross-selling and up-selling and other measures of sales activity. However, this is only a surrogate. You need to listen carefully to your customers to find out what they like and don’t like.

None of these causes for failure is rocket science — or even high school chemistry. They can be easily avoided, as many companies do each year. While that requires some knowledge of the warning signs, mostly it is a matter of attention to detail and understanding where CRM fits into your sales and marketing organization.